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Progress in oncology has resulted in the rapid expansion of more effective, less toxic therapies, due to accumulating insights into cancer biology at the cellular level. However, the rising cost of cancer treatment now competes with the availability of effective therapy as a constraining element in our war on cancer. Patients are often simply unable to afford their personal financial responsibility for the cost of care. This rising cost appears to be due to replacement of less-expensive treatment with higher-cost care, longer patient survival times extending the period of active treatment, demographic changes leading to increased disease prevalence, and changes in the site of care. Oncology drug cost is escalating rapidly. Novel therapies reach patients in an increasingly haphazard payment environment, often placing cost-sharing burdens on patients that are beyond their capacity to pay. About 25% of cancer patients consume most or all of their savings in dealing with their cancer and its treatment. Patients may value treatment in a way that is different from what has been generally perceived, assigning greater importance to the chance of a large survival gain over a more predictable modest benefit.

Three years ago, I counseled a patient after a gastrointestinal stromal tumor had been resected from his stomach. I was pleased to be able to tell him that imatinib (Gleevec), a drug very well tolerated by most patients, would meaningfully reduce his risk of recurrence. Later, we learned that his out-of-pocket expense under his Medicare Part D plan would be several thousands of dollars for a year of treatment. The patient decided the expense was too onerous and that he would forgo treatment. Patient assistance programs are often limited for Medicare beneficiaries, and none could be secured. I pressed to ascertain whether cost was his sole concern, or if there was another unspoken reason for his resistance to proceed with treatment. There was not; his decision was purely due to cost.

How should we view this scenario? Should we think of it simply as the result of cost-sharing arrangements designed to make patients partially responsible for utilization of expensive therapy? Instead, should we decry the millions of dollars already invested in biomedical research and development failing to provide benefits to a patient for whom it was intended?

More than four decades ago, President Nixon signed the National Cancer Act of 1971. Initially, progress was slow. Over the past several years, however, a qualitative change has emerged in both our understanding of cancer biology and the tools we can use to fight it. We can now better discern the biologic mechanisms of the cancer cell itself—the ways in which genetic aberrations drive fundamental properties of malignant cells, namely, altered cell proliferation, capacity for tissue invasion and metastasis, and angiogenesis. Elegant treatments are now being developed that “target” key cellular signals of carcinogenesis or activate endogenous immune mechanisms against malignant cells.

These gains have not come without a price. Research and development is expensive. Patients who survive longer under active therapy generally receive more intense overall treatment; this includes not just the therapy itself but also the radiographic and laboratory surveillance necessary to monitor ongoing treatment response and toxicity. While we strive for the development of more effective, less toxic therapies, this progress may be transforming into a painful paradox: the more we advance scientifically, the more constrained we become economically.

Due to an increasingly robust scientific process, we can now expect therapeutic applications to be identified for dozens of novel cancer therapies over the next few years. However, these new therapies are currently made available to patients in the context of an ever more haphazard payment and coverage environment. Many of these treatments are remarkably expensive despite often providing relatively modest survival gains. These dynamics are forcing us to confront several essential questions regarding the cost of cancer therapy. What is an appropriate cost for cancer treatment? What are the key drivers of cost increases? Who or what mechanism should determine the cost? To what extent should patients be asked to share in the cost of their own care and what do we do when they cannot? What can we do to lower the cost of care?

In Part I of this article, I will focus on our current understanding of drivers of cost for oncology care and the effect of the high cost on patients, as well as on how patients value treatment.

How Expensive Is Cancer Care and What Is Driving This Expense?

Although cost estimates vary, the National Institutes of Health estimated direct spending on oncology care to be $89 billion in 2007 in the US.[1] This spending represented 5% of total healthcare spending and 0.8% of US gross domestic product.[2] Direct medical costs for oncology care include surgery, hospitalization, physician visits, imaging, radiation therapy, chemotherapy, and biologic therapy.[3] Spending for oncology care tends to follow a U-shaped curve: treatment costs are highest in the year following diagnosis and the last year of life, and lower in the intervening years.

How has this spending changed over time? An analysis by Tangka et al compared spending in 1987 vs spending between 2001 and 2005.[4] Between the late 1980s and the 2000s, spending on cancer care approximately doubled. As a proportion of overall medical expenditures, however, cancer costs remained stable, accounting for 4.8% of total medical expenditures in 1987 and 4.9% between 2001 and 2005. Thus, while oncology draws scrutiny largely because of the high cost of newer therapeutics, the cost of cancer care may not have been rising any faster than overall health spending. It is notable that the proportion of spending for inpatient admissions fell from 64% of total cancer spending in 1987 to 27% in 2001 to 2005. The transfer of oncology care to the outpatient setting has produced substantial savings compared with what the cost would have been had this shift from the hospital inpatient setting not occurred.

TABLEFactors Driving Escalating Costs of Cancer Care

Other sources estimate a higher current increase in oncology spending. A recent Institute of Medicine Report estimates that oncology spending is growing at more than 15% annually. Many factors have been implicated as the cause of the upward trend (Table 1). These include replacement of less expensive treatments with more expensive ones; provision of more aggressive care by physicians; and longer patient survival times, leading to prolongation of the period of treatment. Spending on cancer drugs has been estimated to comprise 10% to 15% of total spending on oncology care, with this cost rising between 15% and 20% per year.[5] Tangka et al concluded that the key driver of escalating oncology spending from 1987 through 2005 has been the increased number people living with cancer, not the cost per treated cancer case.[4]

Changes in the site of care may be acting as a more recent cost driver. A recent Milliman report examined the total cost of care for Medicare patients, depending on the site of chemotherapy infusion.[6] The study examined the fee-for-service population from the Medicare Limited Data Set from 2006 to 2009. The per-patient-per-month cost was $4,361 in the physician office setting compared with $4,981 in the hospital outpatient setting, a 14% difference. A similar recent study by Avalere Health examined 3 years of commercial health plan data to determine the total episode cost for cancer patients treated either in the physician office setting or hospital outpatient department.[7] When adjusted for age, sex, and a prior history of cancer, the average cost of an office-based episode was approximately $28,000 compared with $35,000 for a hospital outpatient department–managed episode, a difference of 24%. The unadjusted difference was 34%.

The relative contribution of the various components of spending to the overall oncology cost curve is challenging to disentangle. Furthermore, proportional and absolute spending is a dynamic process. Analysis of historical data may not sufficiently inform us on how to best address the current drivers of the cost curve in an era of rapid scientific progress and evolving regional models of health delivery.

Mariotto et al have modeled how much cancer spending may increase in the future.[8] This modeling requires estimates regarding incidence, mortality, prevalence, and costs of treating individual patients, particularly in the initial year after diagnosis and last year of life. The authors estimated a range of cost increases between 2010 and 2020. Assuming no increased expense of treating an individual patient, total spending can be estimated to rise by 27% over this 10-year period, largely driven by the aging and growth of the US population. If individualized treatment costs were assumed to increase at 5% annually, total spending would then increase by 66%.